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Directors Report of Marg Ltd.

Mar 31, 2015

The Directors are presenting the 20th Annual Report together with the Financial Statements for the financial year ended 31st March 2015.

1. FINANCIAL RESULTS:

(Rs, in Crores)

Particulars Year Ended Year Ended 31st March, 2015 31st March, 2014

Income from operations 168.18 304.66

Non-operating Income 3.13 4.17

Total Income 171.31 308.83

Profit/(Loss) before Depreciation, Finance Cost and Tax Expense (EBDIT) (16.36) (51.18)

Depreciation 22.08 11.42

Interest & Finance charges 136.35 171.91

Profit/(Loss) before tax and exceptional items (174.79) (234.51)

Tax Expense (2.34) 29.29

Profit/(Loss) after tax (172.45) (263.80)

Balance in Profit & Loss Account 42.09 305.89

Amount available for appropriation (130.36) 42.09

Dividend Nil Nil

Dividend Tax Nil Nil

Amount transferred to General Reserve Nil Nil

Balance in Profit and Loss Account (130.36) 42.09

During the Financial Year 2014-15, total revenue of the Company stands at Rs,171.31 Crores as against Rs,308.83 in the previous year. The EBDIT is Rs,(16.36) Crores , compared to previous year of Rs,(51.18). The Company incurred a loss before tax of Rs,174.79 Crores and a net loss of Rs,172.45 Crores during the financial year ended March 31, 2015 as compared to loss before tax of Rs,(234.51) Crores and a net loss of Rs,(263.80) Crores in the previous year. This is primarily due to lack of fund availability for projects, depressed markets, increase in raw materials, and labour cost.

2. DIVIDEND

Due to losses incurred by the Company, your Directors have not recommended any dividend for the financial year ended March 31, 2015.

3. BUSINESS HIGHLIGHTS 2014-15

A. MARG Revenue Stands at Rs, 171.31 Crores in Financial Year 2014-15, including EPC Current order book at around Rs, 2,683.48 Crores

B. Karaikal Port Private Limited (KPPL), a subsidiary of your Company has successfully handled 4.89 MMT of cargo in Financial Year 2014-15 and reported a top line of Rs, 225.97 crores and EBITDA Rs, 95.55 crores.

4. DIRECTORS

The composition of the Board of Directors is in compliance with Clause 49 of the Listing Agreement and Section 149 of the Companies Act, 2013.

The Company has received necessary declarations from the Independent Directors stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

In accordance with provisions of the Companies Act, 2013, Mrs. V P Rajini Reddy retires by rotation and being eligible, seeks re-appointment at the ensuing Annual General Meeting.

5. MEETINGS

During the year under review, the Board of Directors met 7 times.

In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on February 12, 2015.

6. PERFORMANCE EVALUATION

Pursuant to the provisions of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the Companies Act, 2013, the Board is of opinion that a system for performance evaluation of itself and its committees would be established very soon. As contemplated by the Act, the independent directors at a meeting conducted a review of the performance of the Chairman after taking into account the views of the non-executive members of the Board. At the same meeting, the review of the executive directors was also carried out.

The process put in place by the Board, in accordance with the Companies Act, 2013 and the relevant provisions of the Listing Agreement, is aimed at improving the performance of the Board, its committees and its members.

7. AUDIT RELATED MATTERS

A. AUDITORS

M/s. K Ramkumar & Co., Chartered Accountants, Chennai, Statutory Auditors of the Company retires at the ensuing Annual General Meeting and offer themselves for re-appointment from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting held thereafter as per the provisions of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, subject to ratification of the appointment by the members at every AGM held after the ensuing AGM. The Company has received their Consent Letter to the effect that their re-appointment if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013.

B. SECRETARIAL AUDITOR

The Board had appointed M/s Satyaki Praharaj & Associates, Company Secretaries in Whole-time Practice to carry out the Secretarial Audit under the provisions of section 204 of the Companies Act, 2013 and the Rules made there under. The report of the Secretarial Auditor is enclosed to this report as Annexure A.

C. COST AUDIT

During the financial year 2014-15, Your Company has maintained cost accounting records in accordance with the provisions of Companies (Cost Records and audit) Rules, 2014. The Company shall file the Compliance Report as certified by the Cost Accountant Mr. G Sunderasan for the financial year 2014-15 with Central Government as prescribed under Companies (Cost Records and audit) Rules, 2014, in due course.

8. SUBSIDIARY COMPANIES STATUS

Your Company has total of 58 subsidiaries as on 31st March 2015, out of which 5 Non wholly-owned Companies and 53 Wholly-owned companies, including 25 Step-down Subsidiaries. There has been no material change in the nature of the business of the Company and its subsidiaries. Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management Discussion and Analysis Report.

SUBSIDIARY COMPANIES' MONITORING FRAMEWORK

All subsidiary companies are Board managed with their respective Boards having the rights and obligations to manage such companies in the best interest of their stakeholders.

The Company monitors performance of subsidiary companies, interlaid, by the following means:

- Financial statements, in particular investments made by unlisted subsidiary companies, are reviewed quarterly by the Company's Audit Committee.

- Minutes of Board meetings of unlisted subsidiary companies are placed before the Company's Board regularly.

- A statement containing all significant transactions and arrangements entered into by unlisted subsidiary companies is placed before the Company's Board.

Financial Position and Performance of Subsidiaries and Associates

In terms of Section 134 of the Companies Act, 2013 and Rule 8(1) of the Companies (Accounts) Rules, 2014, the financial position and performance of subsidiaries are given as an Annexure to the Consolidated Financial Statements.

9. POLICY AND OTHER MATTERS

A. CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted Corporate Social Responsibility Committee under the Companies Act 2013, on 30th May 2014 which is making exclusive progress in the field of Corporate Social Responsibility and Societal interventions. The Committee is predominantly involved in the areas of Women empowerment, education, health and hygiene, community based programs, including art, music, sports and other socio economic and culture activities.

This Committee has been entrusted with the responsibility of formulating and recommend to the Board a CSR policy broadly indicating the activities to be undertaken by the company apart from the activities (already under implementing) that are mandatory in the implementation of the frame work of CSR policy and recommend the money to be spent on each of the activities as prescribed under Act and the Rules made there under.

B. CODE OF CONDUCT

As prescribed under Clause 49 of the Listing Agreement, a declaration signed by the Chairman and Managing Director affirming compliance with the Code of Conduct by the Directors and senior management personnel of the Company for the financial year 2014-15 forms part of the Corporate Governance Report.

C. DECLARATIONS BY INDEPENDENT DIRECTORS

Pursuant to the provisions of sub-section (7) of Section 149 of the Companies Act, 2013, the Company has received individual declarations from all the Independent Directors confirming that they fulfill the criteria of independence as specified in Section 149(6) of the Companies Act, 2013.

D. EXTRACT OF ANNUAL RETURN

In terms of Section 134 of the Companies Act, 2013 read with Rules 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return of the Company for the financial year 2014-15 is provided in Annexure B to this report.

E. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the requirements of the Listing Agreement, the Management Discussion and Analysis Report titled as Management Report is presented in a separate section of the Annual Report.

F. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees and investments given by the Company under Section 186 of the Companies Act, 2013 is detailed in Notes to Accounts of the Financial Statements.

G. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arm's length basis and all such contracts/arrangements/ transactions have been approved by the audit Committee.

H. TRANSFER TO INVESTOR EDUCATION PROTECTION FUND

In accordance with provision of Section 124 of the Companies Act, 2013, the dividends pertaining to the financial year 2007-08, which were lying unclaimed with the Company was transferred to the Investor Education and Protection Fund during the financial year 2014 - 15. The details of unclaimed dividend transferred to the Investor Education and Protection Fund has been detailed in the Corporate Governance Report forming part of the Annual Report. Members who have so far not encased the dividend warrants are requested to make their claim to the Secretarial Department at the Registered and Corporate Office of the Company or send an email to investor@marggroup.com

10. GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme ESOS referred to in this Report.

11. CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements under clause 49 of Listing Agreement. The Corporate Governance Report approved by the Board of Directors of the Company, forms part of this report and a certificate from the auditors of the Company is set out in the Annexure to this Report.

12. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, forms part of this annual report is provided in a separate section as stipulated under clause 49 of Listing Agreement.

13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS

Your Company has taken adequate measures to conserve energy and the Company believes that productivity from all its workforces can be achieved with interface of latest technology.

Your Company is not an industrial undertaking in terms of Section 134(3)(m) of the Companies Act, 2013 read along with Companies Rule 8(3) of the Companies (Accounts) Rules, 2014 and hence, particulars regarding conservation of energy, technology absorption and adaptation are not applicable and hence the same are not provided.

The information on Foreign Exchange Earnings and Outgo is contained in the note 48 to the Notes on Account. A separate statement is also attached as Annexure I to this Report.

14. PARTICULARS OF EMPLOYEES U/S 197

During the year, there was no employee in receipt of remuneration as prescribed in the Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The prescribed particulars of Employees as required under Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure C and form part of this Report.

However, in accordance with the provisions contained in the proviso to Section 136(1) of the Companies Act, 2013, the Annual Report and accounts excluding the aforesaid information are being sent to the shareholders of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company for the same.

15. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended March 31, 2015, Your Directors hereby confirmed that;

i. In the preparation of the Annual Accounts for the financial year ended 31st March 2015, the applicable accounting standards has been followed and there were no material departures;

ii. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss account of the Company for the year under review;

iii. They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. They have prepared Annual Accounts for the financial year ended 31st March 2015 on a "going concern basis".

v. They had devised proper systems, internal financial controls to be followed by your Company and that such internal financial controls are adequate and have been operating effectively.

vi. The systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

16. EXPLANATION TO THE OBSERVATIONS MADE IN AUDITORS REPORT

The Directors submit their explanation to the Observations made by the Auditors in their report for the FY14-15. The relevant Para nos. of the report and reply are as under:

REFER PARAGRAPH (BASIS OF QUALIFIED OPINION) OF THE AUDITOR'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

- In respect to Note No. 38 to the audited financial statements of the year ended 31st march 2015 regarding unreconciled amount of Rs, 6.52 Crores relating to the equipment loan availed by the Company. The reconciliation of the loan account is under process. The management is of the opinion that the reconciliation will be completed very soon.

- In respect of M/s. Mukta Infrastructure Private Limited, the respective company is of opinion that price of land shall appreciate in future and hence no provision for impairment loss is made.

- In respect of M/s. Arohi Infrastructure Private Limited, the debenture holder has not exercised the Put option during the FY 2014-15, hence the respective company has not provided any premium on redemption during the FY 2014-15.

- In respect of M/s. Riverside Infrastructure (India) Private Limited, the management is taking efforts for resuming the Mall Project and is in discussion with strategic partners for this purpose. Further, considering the latest valuation of the property of the Company, the management considers it appropriate to capitalize the interest of Rs, 39.58 Crores (PY Rs, 41.84 Crores) and overheads of Rs, 0.67Crores (PY Rs, 3.32 Crores) during the year ended 31st March, 2015. Note No.39 of the Consolidated Financial Statements is self explanatory.

- In respect of M/s. Marg Logistics Private Limited, the subsidiary had availed equipment loan and there is an unreconciled amount of Rs.0.43 Crores. The reconciliation of the loan account is under process. Pending such reconciliation the management considers it appropriate to classify the same under "Other advances" in the Balance Sheet as on 31st March 2015. Note No. 40 of the Consolidated Financial Statements is self explanatory.

REFER EMPHASIS OF MATTER OF THE AUDITOR'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

a) In respect of preparing financial statements on 'Going Concern' basis reference is drawn to Note No. 31 which is self explanatory.

b) In respect of Property of the Subsidiary Companies provided security for various loans, reference is drawn to Note No. 32 which is self explanatory.

c) In respect of Property of the Subsidiary Companies provided security for various loans, reference is drawn to Note No. 33 which is self explanatory.

d) In respect of the Investments in and Advances receivable due from some of its Subsidiaries Companies, reference is drawn to Note No. 34 which is self explanatory.

e) In respect of deductions made/amount withheld by some customers reference is drawn to Note No. 35 which is self explanatory.

f) In respect of Work in Progress relating to EPC work done by the Company to one of its Subsidiary reference is drawn to Note No. 36 which is self explanatory.

g) In respect of investment in shares of a subsidiary of Rs 202.39 Crores given as security for loan raised by the Subsidiary company, which were invoked by the Bank, such shares continues to be included in investments, reference is drawn to Note No. 37 which self explanatory.

h) In respect of Companies which were converted and obtained license under Section 25 of the Companies Act, 1956 during the year, reference is drawn to Note No. 41 which self explanatory.

REFER PARAGRAPH (BASIS OF QUALIFIED OPINION) OF THE AUDITOR'S REPORT ON STANDALONE FINANCIAL STATEMENTS:

- In respect to Refer to Note 34 to the audited financial statement of the year ended 31st March 2015, regarding un-reconciled amount of Rs, 6.52 Crores relating to the equipment loan availed by the company. The reconciliation of the loan account is under process. Pending such reconciliation the management considers it appropriate to classify the same under "other advances'' in the Balance Sheet as on 31-Mar-2015. Note 34 of the standalone financial statements is self explanatory.

REFER EMPHASIS OF MATTER OF THE AUDITORS' REPORT ON STANDALONE FINANCIAL STATEMENTS.

- In respect of the financial statements on a 'going concern' basis reference is drawn to note 29 which is self explanatory.

- In respect of the investments in and advances receivables due from some of its subsidiaries reference is drawn to note 30 which is self explanatory.

- In respect of deductions made/amount withheld by some customers reference is drawn to note 31 which is self explanatory.

- In respect of Work in progress relating to EPC work done by the company to one of its subsidiary reference of is drawn to note 32 which is self explanatory.

- In respect of investment in shares of a subsidiary of Rs 202.39 Crores given as security for loan raised by the Subsidiary company, which were invoked by the Bank, such shares continues to be included in investments, reference is drawn to Note No. 33 which self explanatory.

17. FIXED DEPOSITS

During the year under review, your Company has not invited or accepted fixed deposits from the public.

18. EMPLOYEE STOCK OPTION SCHEME

Your Company has implemented Employee Stock Option Scheme for the benefit of the employees of the Company and its subsidiaries, and is being governed by the Compensation Committee of the Board of Directors. During the FY 2014-15, the Company has not granted any option under the Employee Stock Option Scheme. Further, No employee has exercised any option during the year. The statement is given as Annexure II.

The Company has established a vigil mechanism to promote ethical behavior in all its business activities and has in place a mechanism for employees to report any genuine grievances, illegal, unethical behavior, suspected fraud or violation of laws, rules and regulation or conduct to the Chief Vigilance Officer and the Audit Committee of the Board of Directors. The Policy also provides for adequate protection to the whistle blower against victimization or discriminatory practices.

ACKNOWLEDGEMENT

The Directors wish to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors, Employees and members during the year under review.

For and on behalf of the Board of Directors

G R K Reddy

Chairman & Managing Director

(DIN: 00903778)



Place: Chennai

Date: 31st May, 2015


Mar 31, 2014

The Members of

MARG Limited

The Directors are presenting the 19th Annual Report together with the Audited Accounts for the financial year ended 31st March 2014.

1. FINANCIAL RESULTS:

(Rs. in Crores) Particulars Year Ended Year Ended 31st March, 2014 31st March, 2013

Income from Operations 304.66 761.54

Non-Operating Income 4.17 72.00

Total Income 308.83 833.54

Profit/(Loss) before Depreciation, Finance Cost and Tax Expense (EBDIT) (51.18) 40.66

Depreciation 11.42 11.58

Interest & Finance Charges 171.91 89.11

Profit/(Loss) before Tax (234.51) (60.03)

Tax Expense 29.29 (24.00)

Profit/(Loss) after Tax (263.80) (36.03)

Balance in Profit & Loss Account 305.89 341.92

Amount available for Appropriation 42.09 305.89

Dividend Nil Nil

Dividend Tax Nil Nil

Amount transferred to General Reserve Nil Nil

Balance in Profit and Loss Account 42.09 305.89

During the Financial Year 2013-14, total revenue of the Company stands at Rs. 308.83 Crores as against Rs. 833.54 Crores in the previous year. The EBDIT is Rs. (51.18) Crores, compared to previous year of Rs. 40.66 Crores. The Company incurred a loss before tax of Rs. 234.51 Crores and a net loss of Rs. 263.80 Crores during the financial year ended March 31, 2014 as compared to a loss before tax of Rs. 60.03 Crores and a net loss of Rs. 36.03 Crores in the previous year. This is primarily due to depressed market condition and increase in borrowing and raw materials cost.

2. DIVIDEND

Due to losses incurred by the Company, your Directors have not recommended any dividend for the financial year ended March 31, 2014.

3. BUSINESS HIGHLIGHTS 2012-13

A. MARG Revenue Stands at Rs. 308.83 Crores in FY13-14 and EPC Current order book at around Rs. 2,795.08 Crores.

B. Karaikal Port Private Limited (KPPL), a subsidiary of your Company has sucessfully handled 6.23 MMT of cargo in FY13-14 and reported a top line of Rs. 262 Crores and EBITDA Rs. 113 Crores.

4. DIRECTORS

Mrs. V P Rajini Reddy, Director retires by rotation and being eligible offers herself for re-appointment at the ensuing Annual General Meeting.

Mr. Arun Kumar Gurtu, Independent Director, passed away on 22nd November 2013. The Board pays tribute and condolence to the bereaved family and places on record its appreciation for the services provided by him during the tenure as Director of the Company.

Pursuant to Section 161(1) of the Companies Act, 2013 and Articles of Association of the company, Mr. Bahushrut Lugani who was appointed as an Additional Director (Non Executive – Independent) of the company w.e.f 26.05.2014 and who holds office upto the ensuing Annual General Meeting and in respect of whom the company has received requisite notice under section 160 of Companies Act 2013 in writing from a member proposing Mr. Bahushrut Lugani as director of the company be and is hereby appointed as independent director of the company to hold office for period of 5 years.

As per Section 149(10) of the Companies Act, 2013 the Independent Director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment by passing of special resolution in the company and disclosure of such appointment shall be made in the Board''s report. However they shall not be considered for director liable to retire by rotation.

Further as Section 149(11) of the Companies Act, 2013 no Independent Director shall be eligible to hold office for more than two consecutive terms of five years.

5. AUDITORS

M/s. K Ramkumar & Co., Chartered Accountants, Statutory Auditors of the Company retires at the ensuing Annual General Meeting and offer themselves for re-appointment from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. The Company has received their Consent Letter to the effect that their re-appointment if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013.

6. COST ACCOUNTING RECORD

During the FY13-14, your Company has maintained cost accounting records in accordance with the provisions of Companies (Cost Accounting Record) Rules, 2011. The Company shall file the Compliance Report as certified by the Cost Accountant for the FY13-14 with Central Government as prescribed under Companies (Cost Accounting Record) Rules, 2011, in due course.

7. SUBSIDIARY COMPANIES STATUS

Your Company has total of 58 Subsidiaries as on 31st March 2014, out of which 5 Non Wholly-owned Companies and 53 Wholly-owned Companies, including 25 Step-down Subsidiaries.

Pursuant to the Government of India''s General Circular No: 2 /2011 (No: 51/12/2007-CL-III) dated 8th February, 2011 issued by Ministry of Corporate Affairs, the Company has been exempted from attaching the accounts and other information of subsidiaries as required under Section 212 (1) of the Companies Act, 1956. However, a statement is attached in Consolidated Balance Sheet providing the stipulated financial information for each subsidiary. As per the conditions of the above Circular, the same forms part of the annual accounts of the Company.

The Consolidated Financial Statements duly audited are presented along with the Accounts of your Company in this Report. The annual accounts of subsidiary companies are kept at the Company''s Registered Office and also at the respective registered offices of the subsidiaries and shall be made available for inspection to the members/ investors of the Company/any subsidiary, seeking such information at any point of time.

8. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

The Company has, during the year under review, transferred a sum of Rs. 478,226/- to Investor Education and Protection Fund, in compliance with the provisions of erstwhile Section 205C of the Companies Act, 1956. The said amount represents dividend for the financial year 2006-07 which remained unclaimed by the members of the Company for a period exceeding 7 years from its due date of payment.

9. CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements under Clause 49 of Listing Agreement. The Corporate Governance Report approved by the Board of Directors of the Company, forms part of this report and a certificate from the auditors of the Company is set out in the Annexure to this Report.

10. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, forms part of this annual report is provided in a separate section as stipulated under Clause 49 of Listing Agreement.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS

Your Company has taken adequate measures to conserve energy and the Company believes that productivity from all its workforces can be achieved with interface of latest technology.

Your Company is not an industrial undertaking in terms of Section 217(1)(e) of the Companies Act, 1956 read along with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and hence, particulars regarding conservation of energy, technology absorption and adaptation are not applicable and hence the same are not provided.

The information on Foreign Exchange Earnings and Outgo is contained in the Note 44 to the Notes on Account. A separate statement is also attached as Annexure I to this Report.

12. PARTICULARS OF EMPLOYEES U/S 217(2A)

Particulars of employees of the Company, who were in receipt of remuneration, which in aggregate exceeds the limit fixed under Section 217 (2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975 as amended, forms part of this Directors Report. However, as per the provisions of Sec. 219 (i) (b) (iv) of the Companies Act, 1956, the Annual Report and accounts excluding the aforesaid information are being sent to the shareholders of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company for the same.

13. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, Your Directors confirm that;

i) In the preparation of the Annual Accounts for the financial year ended 31st March 2014, the applicable accounting standards has been followed and there were no material departures;

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss account of the Company for the year under review;

iii) They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) They have prepared the Annual Accounts for the financial year ended 31st March 2014 on a "going concern basis".

14. EXPLANATION TO THE OBSERVATIONS MADE IN AUDITOR REPORT

The Directors submit their explanation to the Observation made by the Auditors in their report for the FY13-14. The relevant Para nos. of the report and reply are as under:

Refer Paragraph (Basis of Qualified Opinion) of the Auditors'' Report on Consolidated Financial Statements:

In respect of M/s Mukta Infrastructure Private Limited, the respective company is of opinion that price of Land shall appreciate in future and hence no provision for impairment loss is made.

In respect of M/s. Arohi Infrastructure Private Limited, the debenture holder has not exercised the put option during the FY 2013-14, hence the respective company has not provided any premium on redemption during the FY 2013-14.

In respect of M/s. Riverside Infrastructure (India) Private Limited, the management is taking efforts for resuming the Mall project and is in discussion with strategic partners for this purpose. Further, considering the latest valuation of the property of the company, the management considers it appropriate to capitalise the interest of Rs. 41.84 Crores and overheads of Rs. 3.32 Crores during the year ended 31-Mar-2014. Note No.38 of the consolidated financial statements is self explanatory.

In respect of M/s. Marg Logistics Private Limited, the subsidiary had availed equipment loan and there is an unreconciled amount of Rs. 0.60 crores. The reconciliation of the loan account is under process. Pending such reconciliation the management considers it appropriate to classify the same under "other advances" in the Balance Sheet as on 31-Mar-2014. Note No.40 of the consolidated financial statements is self explanatory.

Refer Emphasis of Matter of the Auditors'' Report on Consolidated Financial Statements.

a) In respect of the investments in and advances receivable due from some of its subsidiaries reference is drawn to note 32 which is self explanatory.

b) In respect of preparing financial statements on ''Going concern'' basis reference is drawn to note 33 which is self explanatory.

c) In respect of property of the subsidiary companies provided security for various loans reference is drawn to note 34 which is self explanatory.

d) In respect of property of the subsidiary companies provided security for various loans reference is drawn to note 35 which is self explanatory.

e) In respect of deductions made/amount withheld by some customers reference is drawn to note 39 which is self explanatory.

f) In respect of Status change of Subsidiaries reference is drawn to note 41 which is self explanatory.

Refer Emphasis of Matter of the Auditors'' Report on Standalone Financial Statements.

a) In respect of preparation of financial statements on ''Going Concern'' basis reference is drawn to note 29 which is self explanatory.

b) In respect of the investments in and advances receivable due from some of its subsidiaries reference is drawn to note 30 which is self explanatory.

c) In respect of deductions made/amount withheld by some customers reference is drawn to note 31 which is self explanatory.

Reply to the qualification made in Annexure to the Standalone Audit Report Point No.3 Due to depressed market conditions and strained financial situation in the group, the Company felt it prudent not to charge interest on loans advanced to wholly owned subsidiaries.

Point No.7 In respect of internal audit system During the Financial Year the Company was carrying out the internal Audit function as inhouse. Due to rotational of Internal Audit staffs and lack of availability of trained staffs, also recommendation by the Board the Company has taken steps for appointing External Chartered Accountants who has expert knowledge and adequate manpower to carry out the Internal Audit. The Company is in the process of appointing the Internal Auditors hence the appointment will be done shortly Point 9(a) & 9(b) of Annexure to Standalone Auditors'' report: The delay in the payment of Provident fund, Employee''s State Insurance, Income Tax, Wealth Tax, Custom Duty, Cess, Sales Tax, Service Tax and other material statutory dues were due to lower cash inflows from the existing projects and the company is arranging to make the payments shortly.

Point No.10 : Due to inordinate delay and uncertainty in implementation of the dry port project, of two subsidiary Companies Marg Swarnabhoomi Port Private Limited and MARG Aviations Private Limited subsidiary companies, has called off the projects hence the huge cash loss was incurred. Point 11 of Annexure to Standalone Auditors'' report: Due to slow down in the Infrastructure and Real estate sector and the resultant impact on the performance of your Company there were defaults in repayments of principle and interest dues to the Banks and Financial Institutions. However, the management opines that with improved business scenario, your Company will be able to meet its obligation.

15. FIXED DEPOSITS

During the year under review, your Company has not invited or accepted fixed deposits from the public.

16. EMPLOYEE STOCK OPTION SCHEME

Your Company has implemented Employee Stock Option Scheme for the benefit of the employees of the Company and its Subsidiaries, and is being governed by the Compensation Committee of the Board of Directors. During the FY13-14, the Company has not granted any option under the Employee Stock Option Scheme. Further, no employee has exercised any option during the year.

The Disclosures required to be made under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is given as Annexure II to this report.

17. JOINT VENTURE

Your Company has following major joint venture companies: (i) M/s. Future Parking Private Limited (in which MARG holds 51% of paid-up share capital), is a joint venture with M/s. Apollo Hospitals Enterprise Limited for the development of Multi Level Car Parking (MLCP) at Wallace Garden, Chennai on BOT basis, with a provision of right for development of commercial complex along with the MLCP facility for the entire BOT period.

(ii) Signa Infrastructure India Limited (in which MARG holds 74% of paid –up share capital), is a joint venture with M/s. Housing and Urban Development Corporation Limited (HUDCO) for Techno-Financial collaboration.

(iii) M/s. Rajakamangalam Thurai Fishing Harbour Private Limited (in which MARG holds 39% of paid-up share capital), is into joint venture with M/s. Rajakamangalam Thurai Development Trust to develop a fishing Harbour at Rajakamangalam Thurai in Kanyakumari District of Tamil Nadu.

18. CORPORATE SOCIAL RESPONSIBILITY – APPROACH TOWARDS SOCIETY

MARG has been making steady progress in the field of CSR and Societal interventions. During the reporting year, MARG has made significant progress in various fields such as health, education, women empowerment and welfare measures for the communities in and around our operational areas. At MARG Swarnabhoomi, the company endeavors to make a positive contribution to the underprivileged people by supporting a wide range of educational and socio economic initiatives. Community projects and programs are driven by active participation of MARG employees at the respective project sites. The Company is continuing to help the tsunami affected people of Nagapattinam districts and company is helping to unprivileged women in rural areas in the filed of Basic courses in Beautician and Tailoring Classes, Mehandi Course and Candle Making have been organized in collaboration with Jana Shikshan Shansthan, Kanchipuram.

19. EMPLOYEE RELATIONS

The Directors place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company at all levels to meet the company''s objectives. The employee relations at all projects and other locations continues to be cordial.

20. BUILDING A STRONG CUSTOMER CONNECT

Customer intimacy is one of your Company''s strategic priorities to reach its ambition of being the leading reference in Infrastructure and Real Estate.

ACKNOWLEDGEMENT

The Directors wish to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors, Employees and members during the year under review.

For and on behalf of the Board of Directors

G R K Reddy Chairman & Managing Director

Place: Chennai Date: 30th May, 2014

 
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